Inspection delays hitting deliveries, says military parts company Data Patterns

NEW DELHI: Data Patterns Limited, an electronic parts maker for the military, said the government’s push for localisation has opened up thousands of crores in revenue potential for the industry. However, the gap between receiving orders and converting them into revenue is widening, as a shortage of inspection personnel delays deliveries.

“The government’s push for indigenous content is creating significant opportunities across the ecosystem, but customer delays in inspecting finished products are holding up deliveries. We have also had these issues in the past, where products were ready, but the inspection team did not arrive because their own requirement to deliver had probably been delayed,” said chairman and managing director S Rangarajan.

The company had an order book of Rs 2,654 crore as of June 30, of which Rs 920 crore was in firm orders and Rs 1,726 crore was under negotiation. Converting pending business into firm contracts and completing deliveries will be key to meeting its growth targets.

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Queries emailed to the defence ministry did not elicit a response till press time.

The government has been accelerating efforts to reduce the defence forces’ dependence on imports, as shifting geopolitical equations can affect capabilities during conflicts. Moving from a reliance on imports for 65-70% of its defence equipment needs in 2013-14, the country is targeting 70% self-reliance by 2030.

Data Patterns has set a goal of Rs 2,000 crore in fresh orders this year. It is also reportedly pursuing a Rs 1,300 crore contract from Hindustan Aeronautics Ltd (HAL), for which it is said to be the lowest bidder. Rangarajan declined to comment on the HAL contract, citing ongoing negotiations.

He said delays in shipments due to customer inspection teams not arriving on schedule affect when products can be delivered and revenue recognised. A major programme was delayed by more than a year and a half, followed by a further six-month extension. The customer has sought another two-month extension to the company’s offer, he said.

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The company told investors during a meeting that some large programmes had taken longer than expected to convert into firm contracts, despite negotiations being substantially completed.

Kotak Institutional Equities expects India’s defence capital expenditure to increase 11% annually between 2025-26 and 2029-2030 to Rs 2.8 lakh crore, supporting a multi-year expansion in domestic procurement. Acceptance of necessity approvals, an early procurement milestone, surged nearly tenfold to Rs 9.3 lakh crore in 2025-26, it said in a report. However, such approvals usually precede contract finalisation by one to two years, the report said, adding that new orders worth Rs 6.5-7 lakh crore are expected between 2026-27 and 2028-29.

For companies such as Data Patterns, this points to a substantial market opportunity, but the timing of conversion into firm contracts and revenue remains crucial. The Kotak report said that companies with large order books, proven execution and diversified portfolios are better positioned to sustain growth.